WPP reports 15.1% fall in net sales

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WPP’s Revenue in the first half was £5.6 billion, down from £6.4 billion in the first half of 2019. Revenue less pass-through costs were £4.7 billion, down from £5.2 billion in the first half of 2019.

Resilient performance in a challenging environment; market-leading new business performance; improved liquidity and on track to be towards the upper end of £700-800m cost savings target; an interim dividend of 10p declared.

WPP’s H1 and Q2 financial highlights

  • WPP H1 reported revenue -12.3%, LFL revenue -11.5% (Q2 -18.4%)
  • H1 revenue less pass-through costs -10.2%, LFL revenue less pass-through costs -9.5%
  • Q2 LFL revenue less pass-through costs -15.1%: US -9.6%, UK -23.3%, Germany -11.6%, Greater China -3.1%, India -25.1%
  • H1 headline operating margin 8.2%, down 3.7pt on the prior year as cost savings offset the majority of revenue decline
  • Cost savings of £296 million in H1, on track, to deliver towards the upper end of the £700-800 million targets. Around 25% of these savings expected to be permanent when returning to 2019 levels of revenue less pass-through costs
  • WPP reported loss before tax impacted by £2.7 billion of impairments (£2.5 billion goodwill, £0.2 billion investment and other write-downs); relating to acquisitions whose carrying values have been reassessed, triggered by the impact of COVID-19, and driven by a combination of higher discount rates, a lower profit base in 2020 and lower industry growth rates
  • WPP’s Net debt at 30 June 2020 £2.7 billion, down £1.5 billion year-on-year reflecting Kantar transaction and strong working capital management

Strategic progress, shareholder returns and outlook

  • Transformation delivering results: VMLY&R and Wunderman Thompson our two best-performing integrated agencies
  • Strong new business performance, reflecting enhanced offer and improved collaboration
  • Continued recognition of creativity and effectiveness: Effies winner for a ninth successive year; Cannes Lions Agency Holding Company of the Decade
  • 2019 final dividend cancelled to support lower leverage; share buyback still under review but the intention to restart when environment stabilises; 10p 2020 interim dividend declared
  • Current trading showing sequential improvement on Q2 but the market remains volatile: July LFL revenue less pass-through costs -9.2%. US -6.1%, UK -10.5%, Germany -7.2%, Greater China -18.6%, India -15.5%
  • Full-year 2020 LFL revenue less pass-through costs growth and headline operating margin expected to be within the range of analysts’ expectations5
  • Capital markets event to update on strategic progress, long-term efficiency savings and capital allocation planned before the 2020 year-end

Mark Read, Chief Executive Officer, WPP:

“After two months in which our strategic progress could be measured by growth outside Greater China, the second quarter saw an inevitable downturn, with like-for-like revenue less pass-through costs declining by 15%, albeit better than our expectations. Assuming there is no second wave nor major lockdowns, the second quarter is expected to be the toughest period of the year, although we remain cautious on the speed of recovery.

WPP reports 15.1% fall in net sales
Mark Read

“Our strategic transformation remains on track but as COVID-19 accelerates the change in our sector, we are accelerating our plans. We continue to attract new talent, invest in technology and e-commerce, and train our people in the skills they need for the future, with more than 20,000 receiving accreditations from Adobe, Amazon, Facebook, Google and Salesforce this year.

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“We are working with our clients to help them get back to business, adapt their marketing strategies at speed and reshape their operations for a new world. Brands are seeing increases in online sales of 100% and more, and we are supporting eight of our top ten clients on e-commerce strategies. Our new business record is industry-leading, at $4 billion in the first half, including wins from Intel, HSBC and Unilever, and our pipeline remains strong.

“With £4.7 billion of liquidity thanks to the Kantar transaction, and as we deliver against our cost savings targets, our financial position remains strong. As a result, we are able to return to paying our dividend, with an interim dividend of 10p for 2020.

“I would like to thank our people around the world, the vast majority of whom have been working from home and have shown great creativity, agility and collective spirit to support our clients in challenging times.”

WPP’s Market environment

The market in the first two months of 2020 progressed in line with expectations before the impact of COVID-19 began to be widely felt from March onwards.

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As a result of the significant restrictions on many aspects of economic activity, GroupM now forecasts that the global advertising economy will decline by 11.8% in 2020, after a growth of 6.2% in 2019. Within this, spend on digital media is expected to increase to 54% of total spend in 2020, from 48% in 2019, as the impact of COVID-19 accelerates an underlying structural trend.

As consumers increased their time at home, we generally saw heightened levels of consumption of media and rapid expansion of e-commerce activity. As a result, businesses are looking to grow their e-commerce and multi-channel capabilities.

More specifically, TV and video consumption has grown rapidly, driven by on-demand and streaming services. Consumers have also needed to change their shopping patterns, with eCommerce surging, finding new adopters and penetrating new categories. On the other hand, media spend on outdoor, cinema and print has suffered materially.

Activity and spend trends by geography have for the most part been driven by the closing and re-opening of economies. Based on GroupM forecasts, China is expected to see only a 2.8% decline in the advertising market this year, reflecting its strong underlying economic growth and rapid and successful response to the pandemic.

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Major markets in Europe, on the other hand, are forecast to decline 10-20% given the more sustained lockdowns and lower underlying growth. The USA is expected to decline by 7.5% or -12.9% excluding political spend.

In terms of sectors, marketing spend from consumer packaged goods, technology and pharmaceuticals businesses (56% of WPP’s revenue less pass-through costs in the first half) has held up relatively well as demand for their services has been less impacted or in some cases significantly enhanced.

Automotive, luxury, travel and leisure businesses (22% of revenue less pass-through costs) have been understandably the hardest hit and this, in turn, has been reflected in their marketing spend.

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WPP reports 15.1% fall in net sales - Brand SpurWPP reports 15.1% fall in net sales - Brand Spur

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The Boutique Hotel Under Gudou Holdings Co., Ltd. Further Expands to Panyu District, Guangzhou— Guangzhou Gudou Quanfeng Residence Officially Opens on 10 February 2021

HONG KONG SAR - Media OutReach - 25 February 2021 - Gudou Holdings Limited ("Gudou Holdings" or "Company", which together with its subsidiaries, is referred to as the "Group", SEHK stock code: 8308), is pleased to announce that Guangzhou Gudou Quanfeng Residence, the Group's first boutique hotel project in Panyu District, Guangzhou City, has officially opened on 10 February 2021.

Guangzhou Gudou Quanfeng Residence has 33 guest rooms, including 2 two-bedroom suites and 3 three-bedroom suites. The design is modelled on one of the ancient Lingnan (southern Chinese) architectural style, "Guanyindou", which features the shape of two handles of a wok on either sides of the roof of a building in the ancient town of Shawan, Panyu. Carrying on the tradition of the "Gudou" brand, the hotel organizes one-stop leisure and entertainment activities and are installed with comprehensive facilities to provide a new experience for tourists who prefer to enjoy the finer things in life in the traditional ambience.

Guangzhou Gudou Quanfeng Residence is conveniently located in the Hills Ecool Creative Park in Panyu, which occupies a total site area of​​340,000 square meters at the southern tip of Panyu District. The hotel is easily accessible by a developed network of roads around the Hills, including South China Expressway, Xinguang Express, Nansha Port Express and other highways. Therefore, it is easy to travel from the hotel to Zhujiang New Town in Guangzhou, and thus elsewhere in the Pearl River Delta. It takes five minutes to reach the Chimelong Paradise, and the Blessing Colorful World within easy reach. The Clifford Station on Metro Line 21 will also be opened in 2021 and it is only an about 10-minute walk from the hotel. In the Panyu Golden Valley Eko Creative Park, a head office for environmental operation of business and a district for shopping and leisure will be built. Such plan has earned the park a reputation as "China's Number One Low-Carbon Community". The rising occupancy rates of the office buildings in Panyu will also mean an increase in business travelers who, in turn, can drive up the occupancy rates of the hotel and the spending there.

There are many well-known tourist attractions near Guangzhou Gudou Quanfeng Residence, including Chimelong Paradise, Blessing Colorful World, Dafu Mountain Forest Park, Lianhua Mountain Tourist Area, Shawan Ancient Town and IKEA Store, which is popular with young people. The Evergrande Football Stadium, which can seat 100,000 spectators, is also expected to be completed in 2022 and will be able to accommodate tourists who stay in Guangzhou for two days and one night.

Mr. HON Chi Ming, Chairman, Chief Executive Officer and Executive Director of the Group, said, "The Group is very satisfied and encouraged by the opening of the Guangzhou Gudou Quanfeng Residence. The hotel is conveniently located in an area where there are comprehensive facilities. Therefore, the area is expected to attract a large number of tourists. Since the apartment hotel has already been renovated and equipped with upgraded facilities and soft furnishings, not much more capital will be required for putting the hotel in operation in a short time. This means cost-effectiveness at the hotel and can quickly responding to the trend of tourism recovery. Looking ahead, tourism property development will remain the focus of the Group's business development. Specifically, we will actively expand our tourism property business in Guangdong Province, provide more quality services to meet customer needs, and increase investors' awareness of Gudou Holdings' brand. All this is aimed at creating better returns."


About Gudou Holdings Limited

Gudou Holdings is a hot spring resort and hotel operator and a tourism property developer in the People's Republic of China ("PRC"). It principally engages in (i) the operation and management of the hot spring resort and hotel facilities of Gudou Hot Spring Resort, which is a national AAAA-level tourist area, and provision of consultancy and/or management services; and (ii) the development and sale of tourism properties in Guangdong Province. The "Gudou" brand is a well-known brand of integrated hot spring resort in the PRC. Gudou Holdings operates six theme hotels, among which Royal SPA Hotel was rated as a five-star hot spring by the National Hot Spring Tourism Enterprise Star Rating Committee in 2020. The resort complexes with a variety of leisure and recreational facilities, including hot spring facilities, hotels, commercial stores, food and beverages outlets, recreational waterpark, a spa centre, a conference centre, parks, tourist attractions and other ancillary leisure and recreational facilities. The Group's newly established Guangdong Gudou Quanfeng Cultural Tourism Development Co., Ltd. has further expanded its presence to Guangzhou with the official opening of Guangzhou Gudou Quanfeng Residence on 10 February 2021, marking the latest headway following the official operation commencement of Gudou Spring Superior Hotel, located in the center of Jiangmen on 15 January 2021.


WPP reports 15.1% fall in net sales - Brand Spur
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